As GovCons navigate an increasingly complex federal contracting landscape, one thing is becoming abundantly clear: accounting infrastructure is no longer a back-office function—it’s a strategic differentiator.
Rising compliance requirements, tighter margins, heightened audit scrutiny, and evolving customer expectations are placing unprecedented pressure on government contractors of all sizes. To better understand where contractors are succeeding—and where they’re struggling—the Government Contractors Accounting Challenges Survey 2026 examined company size, accounting system usage, compliance confidence, and the most persistent operational challenges facing accounting teams today.
The results paint a clear picture of a market at an inflection point.
A Market Dominated by Small GovCons—With Big Accounting Challenges
The 2026 survey shows that the GovCon market continues to be dominated by small businesses, many of which are actively scaling through set-aside programs like 8(a), expanding contract portfolios, or transitioning from subcontractor to prime.
Encouragingly, nearly half of respondents report strong confidence in their compliance posture—a testament to the effort many contractors are making to understand FAR, CAS, and agency-specific requirements.
However, confidence alone does not equal capability.
Despite positive sentiment around compliance, respondents consistently identified system limitations, manual processes, and lack of specialized accounting expertise as barriers to operational effectiveness. For many GovCons, accounting infrastructure simply hasn’t kept pace with growth.
Where GovCon Accounting Teams Are Struggling Most
While compliance confidence remains relatively high, the survey reveals several critical pressure points that introduce financial and operational risk:
🔹 Forecasting & Financial Visibility
Many GovCons report difficulty producing accurate forecasts, particularly across multi-year contracts, IDIQs, and option periods. Without reliable forecasting, leadership teams struggle to make informed hiring, investment, and bidding decisions.
🔹 Contract Profitability & Cost Tracking
Understanding true contract profitability remains a challenge—especially when indirect costs, labor mix changes, and contract modifications come into play. Weak cost allocation and limited reporting capabilities often obscure margin erosion until it’s too late.
🔹 Indirect Rate Management
Indirect rate development, monitoring, and adjustment continue to be a major pain point. As companies grow, informal methodologies that worked at earlier stages become unsustainable and risky.
🔹 Month-End Close & Reporting Execution
Delayed closes, manual reconciliations, and fragmented data environments are common themes. These inefficiencies not only strain accounting teams but also limit leadership’s ability to respond quickly to performance and compliance issues.
Together, these challenges highlight a critical reality: as GovCons scale, accounting complexity accelerates faster than infrastructure investment.
Growth Without Infrastructure Increases Risk
The survey reinforces what many government contractors are experiencing firsthand: Growth brings complexity—and complexity demands stronger financial infrastructure.
Without scalable accounting systems, compliant processes, and GovCon-specific expertise, contractors face increased exposure to:
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Audit findings
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Delayed billings and cash flow disruptions
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Misstated indirect rates
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Inaccurate pricing and proposal risk
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Reduced competitiveness for larger, more complex awards
In today’s contracting environment, reactive accounting is no longer sufficient.
Aligning Accounting Strategy With Growth Ambitions
The most successful GovCons are treating accounting as a strategic function, not just a compliance requirement. They are investing in:
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GovCon-ready accounting systems
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Documented, repeatable processes
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Real-time reporting and analytics
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Proactive compliance monitoring
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Experienced advisory support
By aligning accounting capabilities with growth objectives, these firms are better positioned to compete, comply, and scale profitably—even as regulatory and operational demands intensify.
Download the 2026 White Paper
Download the Government Contractors Accounting Challenges Survey 2026 White Paper to explore the full findings, data insights, and strategic implications for GovCons at every stage of growth.
Need Support?
If you have questions about the 8(a) program, upcoming compliance changes, or want help assessing your current accounting and compliance posture, BlueStreet is here to help.
Our team provides strategic accounting and compliance support to GovCons, helping contractors strengthen financial infrastructure, improve audit readiness, and ensure alignment with proper federal contracting and accounting practices—before issues arise.